How Bundled Payments Could Improve the Affordable Care Act

If you could change one aspect of the Affordable Care Act, what would it be?

SUSAN DEVORE: For nearly two decades, Premier has worked with our member providers to achieve simultaneous improvements in cost and quality. One of the main reasons this work is so challenging is the misaligned incentives built into our Medicare fee-for-service system.

The fee-for-service structure can promote fragmentation in care delivery, incent duplication of services and higher costs, and fail to reward the highest quality care. What’s more, the system is overburdened with laws and regulations that prevent collaboration among healthcare providers, and it stands in the way of efforts that could improve the quality, cost effectiveness and coordination of care.

While accountable-care organizations are a constructive step forward, we believe that one of the ACA’s big missing pieces is the creation of a national, voluntary bundled payment program.

This form of payment puts all the care providers who touch a patient in the same “bundle.” The bundle would start before a patient enters a hospital and include care provided during and after the hospital stay. This incents all providers to work together for shared financial rewards that result when they are able to efficiently deliver higher quality, more cost effective care with excellent patient satisfaction, across the entire care episode.

Bundled payment provides the kind of flexibility and innovation we need in healthcare. In a voluntary program, organizations could sign up annually for five-year terms. As organizations learn and demonstrate success, others will want to join. This will create a cycle of constant improvement and innovation.

Some examples of the value of this reform include a Medicare heart bypass surgery bundled payment demonstration that saved $42.3 million, reduced patient insurance costs by $7.9 million and improved care while lowering mortality rates.

Another is the success of Geisinger Health System’s ProvenCare Coronary Artery Bypass Graft surgery program, which demonstrated a 16 percent improvement in length of stay, a 15.5% reduction in 30-day readmission rates and 5.2% decrease in mean hospital charges.

Employers are using this approach as well. For example, Wal-Mart and other large corporations have announced partnerships with high quality health systems, including Johns Hopkins Bayview Medical Center, to deliver high cost hip and knee replacement surgeries to their employees through a bundled payment program.

All of this progress is promising…but it isn’t enough. We need to move further, faster. A change in the law, with the appropriate provider incentives to participate in a national bundled payment program, would greatly accelerate what is already gaining popularity and working in the private sector.

Susan DeVore is president and CEO of Premier, Inc., a health-care performance improvement alliance of approximately 2,900 U.S. community hospitals.